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ELFAA complains to European Commission against ?700m subsidy for Alitalia

8th January 2009 - 11:00 GMT | by The Shephard News Team


The European Low Fares Airline Association (ELFAA) has submitted a formal complaint to the European Commission against unlawful state aid to Alitalia and its successor Compagnia Aerea Italiana (CAI).

The Association says CAI/Alitalia will benefit from state aid in the region of €100 million a year over a seven-year period thanks to the ‘Save Alitalia Decree’. In this law, described as "highly controversial " by ELFAA, the Italian Government imposed an airport tax of €3 per passenger from 28 October 2008, which ELFAA says not only ensures a constant flow of unlawful aid to CAI/Alitalia, but also offloads the cost of the subsidies onto CAI’s competitors.

“ELFAA members are extremely concerned about the precedent this subsidy sets. This time not only the taxpayer but also the competition pays,” declared John Hanlon, secretary general of ELFAA. “Nothing less than the credibility of the European Commission is at stake. If the EU allows Member States to tax foreign companies to finance an ailing national champion, the Single European Market is sacrificed at the altar of economic nationalism.

“Even before the European Commission ruled in November that Alitalia has to pay back €300 million of state aid, the serial basket case of European aviation got the promise of another mind-boggling cash injection. ELFAA is today calling on the European Commission to put an end to this scandalous state aid and to overturn the ‘Save Alitalia Decree’ and the €3 tax.”

The tax will raise approximately €210m per year by levying €3 on each of the 70 million passengers departing from Italian airports annually. ELFAA member airlines will account for approximately 15 million departing passengers at Italian airports in 2009, thus incurring a cost of €45m.

ELFAA’s conservative estimate is that CAI/Alitalia will benefit from roughly €100 million per annum on average in state aid, through changes to the social security system introduced in “decreto Salvalitalia” (the Save Alitalia Decree – Decree 134/2008) of 28 August 2008. This aid, which ELFAA says is unlawful, takes the form of: financing Alitalia’s obligation to provide redundancy benefits; and lowering social security costs for CAI when it employs former Alitalia employees.

"This aid will further distort the competitive situation in the EU air transport market by allowing Alitalia/CAI to benefit from unfair subsidies to the detriment of all other airlines active in this market," ELFAA concludes.

The Shephard News Team


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